As if the public isn’t jaded enough with bad news out of Washington, now the news doesn’t even make that much sense. According to end of the year data, our economy has demonstrated very little growth over the summer months with a dismal 1.8% annual growth rate.
A large component of slow economic growth is consumer spending, which makes up 70% of overall economic activity. It has been speculated the weak jobs market has pushed many consumers to become more conservative with their budget but contradictory figures out of the United States Department of Labor challenge this theory.
It doesn’t take a Harvard-educated economist to understand increases in the job market should lead to increases in commerce. That same non-Harvard graduate should be able to figure out that decreases in unemployment benefit filings should indicate increases in employment.
Unemployment Benefit Filings Hit Lowest Level in 3 Years
The United States Department of Labor released their Unemployment Insurance Weekly Claims Report this morning showing some positive changes for the week ending December 17. Here is a quick recap of the report:
- Overall there was a 4,000 drop to 364,000 of seasonally adjusted initial claims
- Total number of individuals claiming benefits across all unemployment benefits decreased by 299,738 to 7,149,769
- Two states with the largest decreases in benefit claims are California and New York with -15,583 and -11,486 respectively
Should the Gov’t Extend Benefits
The end of the year also brings the end to a lot of deadlines, two big ones eating up headlines: payroll tax and unemployment benefits. There are about 697,000 Americans on edge as the unemployment benefits provision will hit its deadline in a short 9 days. Another 2.6 million will be losing benefits in early March if there isn’t an extension to this plan.
Leaders in Washington have been more focused on the payroll tax this week. A ruling gridlock as trivial bi-partisan antics and vacation days have gotten in the way of making a decision. An initial two-month extension was shot down by the House Republicans, causing lawmakers to backpedal on the matter. All the focus on the payroll tax has detracted attention from the unemployment benefits, but not completely forgotten them. Unemployment benefits are actually included in the tax extension bill.
These lowered benefit requests coming out of the Department of Labor beg the question of whether or not an extension is really needed. Unfortunately, there may be lowered claim filings, but the fact of the matter is our economy is still not showing the growth it needs for consumer confidence to increase.
With the revised growth rate dropping to 1.8% from an initial projection of 2.0%, many are still looking to Congress to “fix” the country through extensions and benefits. The unemployment rate may be lowering, but it is still nearly 3.5% higher than previous years. As the year wraps up and statistics are analyze it’s perfectly natural to see both positive and negative figures in relation to the economy, but it is about time these figures provoke action, as opposed to speculation, to move towards a more stable economy.